Permanent Staffing in India: what is the road ahead?

Recruiters in India are experiencing a very unique paradox- Plenty of talent to choose from but very few that qualifies for short-listing. To attract clients to generate business and to stand-out from the competition, this has spurred the development of new age jargons to put the same old wine in new packing. Staffing Solutions, Manpower Solutions or Recruitment Solutions, whatever name one uses, the core essence remains the same. Different people have different set of jargons to address a particular service and staffing industry is no exception to this tradition. As far as Indian Staffing and recruitment industry is concerned, there are four main solutions- Permanent staffing, Contract staffing, Recruitment Process Outsourcing (RPO) and Executive search. There are many other customized recruitment solutions being offered by staffing companies but the major part of pie is shared by permanent staffing and contract staffing.

As per the definition available on internet, “permanent staffing is the process of bringing together a job seeker and a prospective employer for the pur­pose of a traditional employment relationship, for a fee”. It also refers to the process of arranging such a relationship.

Permanent staffing has grown on the back of growth in key industries such as IT, FMCG, with large MNCs entering into Indian market and expanding their presence. In recent past, emergence of many new internet and cloud based technologies has also led to increase in demand of skillful permanent employees.

Though most firms go for a mix of both permanent and temporary staff, still perm-staffing is very essential for any organization as it brings a feeling of job- security among employees and in return they offer higher level of commitment. Backing on ‘commitment’ and ‘sense of responsibility towards organization’ of the permanent employees, companies plan their future growth and expansion strategies.

If we look into numbers, as per report published by ISF in 2014, we learnt that, permanent staffing is way behind contract staffing with 12% share of total staffing pie. While contract staffing enjoys 75% of share, rest 13% goes to other services such as RPO, executive search and others. According to a report published by Ernst & Young (EY) in year 2012, this break-up was: 73% temp-staffing, 13% perm-staffing and rest 14% share was with other services. The share of perm-staffing in last 5-6 years can be tracked from following graph:

The share of contact/temporary staffing in overall staffing and recruitment market sometimes leads to a debate that temporary staffing is preferred over permanent because temporary employees outperform the permanent employee and because of this, in future, permanent staffing is going to see a fall in its demand. But I have a different opinion at this, for me, it all depends on an individual’s vision and acceptance for the job offered and the level of understanding of a specific job description. Attitude and Adaptability forms the main core on how to stay on top of the game plus good compensation benefit that will drive employees to come to work and give their best shots in delivering the results expected at the end of the day. If still temporary employees outperformed the permanent employees in the same field of work, then Management should look into that to figure out what causes the dip of performance? What is the Root Cause Analysis (RCA) of such incidents? Because, No doubt, permanent staffing has seen a drop in its share over the years but it is here to stay. I also feel that this is the rock bottom which permanent staffing has touched in terms of its share in total staffing market and from here; the only way it has in front of it, is to grow and only grow.